With this bunch, at times you gotta wonder; other times you just know. Audit finds misuse of $300K in DOE grant funds

John White’s Department of Education just can’t seem to keep tabs on all these pop-up private for-profit education facilities that have proliferated under his and Gov. Bobby Jindal’s sweeping educational reform programs.

Questionable expenditures by an organization under contract to the Louisiana Department of Education (DOE) have been flying under the radar, overshadowed as it were, by corruption charges against internal auditors with the Louisiana Department of Children and Family Services.

Remember New Living Word up in Ruston? That’s the school that was approved for some 300 vouchers even though there were no instructors, no computers, and no facilities—and obviously, no vetting. Just an application from the school was all that was needed, and BAM! Instant approval.

Not that New Living Word was the only one; there were others, including one in which the director had a long of history of legal problems and another in which the director referred to himself as a “prophet.” And there was the charter school that decided it could conduct random pregnancy tests on female students after one girl was expelled when it was learned she was pregnant, though no punishment was meted out for the dad, a member of the school’s football team. Only threatened legal action by the ACLU reversed the ill-considered policy.

Still, New Living Word became the instant poster child for DOE’s bureaucratic ineptitude.

Until now.

Now we have Open World Family Services, Inc. a New Orleans education “nonprofit” established ostensibly to “strengthen the family through education and training,” and paid through grants under the 21st Century Community Learning Center, a federally-financed program funded through a $1.4 million contract with DOE that ran from May 1, 2009 through April 30, 2012.

Or perhaps we should have said had Open World Family Services, Inc. It closed its doors on May 31, 2012, a month after its contract with DOE ran out.

But not before its administrator managed to misappropriate, misspend, mishandle, mismanage, fold, staple and mutilate more than $300,000, according to Legislative Auditor Daryl Purpera’s office.

Included in that amount were $116,323 in expenses which Open World did not incur, $148,596 in unapproved purchases and expenses that included debit card withdrawals ($16,758) airfare to Monrovia, Liberia ($7,204) and payments to the immediate family of Executive Director Kim Cassell ($18,414).

Cassell’s attorney assures us it was all just your basic “lack of knowledge of grant management” that led to a number of “errors in funds management.”

That would be the usual errors, like requests for reimbursements listing 129 specific checks (all payable to vendors) totaling $221,624 when only 74 of those checks totaling $105,301 actually cleared Open World’s bank accounts. But what of the remaining 55 checks? Well, Cassell’s former administrative assistant told state auditors that Cassell instructed her to pull blank checks and use or record the blank check numbers on reimbursement requests for “projected” vendor expenses.

“By submitting reimbursement requests that included false information, Open World improperly received $129,402 in reimbursements from DOE and may have violated state and federal laws,” the audit report said.

Just an error in funds management.

Kinda makes you wonder about those seven contracts worth a combined $430,000 that the Department of Health and Hospitals (DHH) has awarded to Open World Family Services since 2008 to combat asthma and tobacco use. Did that money go up in smoke as well?

Open World, the audit says, submitted requests and received reimbursements for employee benefits totaling $13,079 for which no expense was incurred.

Another simple error in funds management.

From May 2009 to October 2011, Cassell improperly used public funds totaling $11,108 for veterinary bills and pet supplies, a homeowner’s insurance payment, personal travel and college tuition payments, according to the audit report.

Ditto on the error in funds management.

Cassell’s time sheets from Sept. 18, 2010, to Oct. 19, 2010, indicate that she was on vacation and traveling. But during that same time period, the audit says, she made debit card withdrawals in Monrovia, Liberia, totaling $4,576 and that she incurred airfare charges totaling $200 on Oct. 17, 2010.

She explained to auditors that she traveled to Liberia for the purpose of registering Open World as a Non-Government Organization (NGO) in West Africa.

She also incurred charges on the organization’s debit card totaling $1,099 in Brooklyn Center, Minnesota, while on travel to that state in November of 2010.

In all, the audit says that from May 2009 to February 2012, only a couple of months before her grant contract with DOE ran out, she used $148,596 in grant funds for puchases and expenses not included in approved grant budgets. That amount included $97,961 for rent, utilities and building improvements; $16,758 in undocumented debit card withdrawals; $7,204 in undocumented airfare charges; $15,340 for insurance policies, and $11,333 for vehicle expenses. “By using grant funds for unauthorized purposes, Open World appears to have violated its grant agreements and may be required to reimburse funds improperly spent,” the report says.

New Orleans attorney Jauna Crear wrote a five-page letter of response to the audit’s findings but basically defended her client’s actions in a single sentence:

“An overall review of the allegations, along with Ms. Cassell’s explanations, clearly shows a lack of understanding of the non-profit governance rules as opposed to a willful disobedience thereof.”

All of which raises several questions:

Does DOE customarily hand out multi-million dollar contracts to non-profits with inadequate experience in handling public funding?

What safeguards does John White have in place to prevent abuse, theft, and misapplication of public funds by other organizations under contract to DOE?

Does John White believe it might be worthwhile to conduct a review of other such contracts/grants?

Is it possible that DOE, like DHH, may have eliminated the position(s) of internal auditor as a cost-cutting measure?

Will DHH review the seven current and past contracts it has awarded to Open World Family Services totaling $430,000?

Like this:

Related

17 Responses

Mr. Aswell, if DOE doesn’t prosecute Kim Cassell, I hope you as a Louisiana taxpayer will sue her and DOE for misconduct, theft, and fraud. Sue for damages to be paid to the State Treasury, prison time for Ms. Cassell, dismissal and forfeiture of benefits for DOE Supervisors that refused to act on this matter, and certainly for your time and expenses in bringing this suit. Until such time as guilty parties to State fraud are held personally accountable, matters will persist as they have in both the past and present.

I keep waiting for the crap to hit the fan with one of these clowns but evidently Bobby must have sold the fan to a crony with the promise to never turn it on. When are the Feds gonna jump on some of this?

Doesn’t the elimination of inhouse auditors occur quite often in State government seems like I’ve seen this before, Tom? Maybe they should just hire a “profit” I mean prophet or better yet just “white wash” it!!

Excellent article! This is another reminder of just how pathetic it is that the state’s major media do not dig into such stories that are just crying out to be told. You have to wonder too, when are the feds going to do their jobs and crack down on all the in-your-face corruption you expose? Thank you.

Excellent point!!!! Speaking of people doing their jobs, we’ve not heard much from our State Inspector General since he tried and convicted Murphy Painter in the press. Painter was subsequently completely exonerated, to much less fanfare and his legal bills were appropriated in the just-ended legislative session. So, this big case cost the state a lot of money and cost Mr. Painter his personal reputation. Hmmmm…..I guess it’s better we haven’t heard anything out of the IG lately.

I work at a university in the UL system, and, like the rest of the state employees they tell us, we have to take multiple hour long online courses on ethics annually or even bi-annually. It’s a huge inconvenience, and it makes the despicable behavior of these characters all the more unconscionable.

As much as I applaud Mr. Aswell’s work and agree with almost everything he said, I have to point out the comment on the DOE internal auditor is a bit off the mark in this case. The DOE still has an internal audit office, albeit it reduced by budget cuts to the point of being barely functional; however, the internal auditor is not the main line of ‘defense’ in this case because it does not have the resources to audit every nonprofit which has a contract with DOE.

The DOE has program managers whose responsibility is to monitor and ensure the nonprofit entities participating in their programs are operating according to program regulations. They would be the first and main line of defense.

As a former auditor in LA state government, I can also tell you the Legislative Auditor’s Investigative Division would have been responsible for conducting the Open World Family Services [OWFS] investigation. That Division does not audit a ‘nonprofit’ such as OWFS as a matter of routine, due to the large number of nonprofit entities within the State, but rather, such an investigation is usually selected based on ‘tips’ received from whistle-blowers or other inside anonymous sources. It is, therefore, entirely possible Mr. Purpera’s Office conducted that investigation as a result of anonymous information received from whistle-blowers within the DOE who knew something was wrong but were unable to publicly say or do anything about it.

It is a disservice to state employees to assume they are not aware of these type of inappropriate or illegal activities or don’t care about things like this within their agency. As a former state employee I can tell you they DO care and are as distressed about some of these things as members of the public outside of state service. After all, they pay taxes just like the rest of us.

AMEN, Gunner! I, too, am a former State employee. To make matters worse, I had to process some of these sorts of “farce” contracts and often went home sick to my stomach, knowing if I blew any whistles, I’d be on the street in a heartbeat. This is only one of a LOT of contracts out there, both grant and State funded, that do this sort of thing. This one just happened to get caught.

You are right on target regarding the program (contract) monitors. However, most are in the same position of having to keep their mouths shut for fear of losing their jobs. It’s a vicious circle and refreshing to see some of them caught from time to time.

Email Subscription

Like what you read here? Send a free subscription to a friend or subscribe for yourself. Type in his/her email address in the square below and then click on “Sign me up!”

Join 3,392 other followers

Donate!

LouisianaVoice does not accept advertising because we insist on an independent voice. Likewise, we do not charge a subscription fee for our blog.
That is not to say we do not have expenses—lots of them. Moreover, we would love to add a reporter to provide even better coverage of the underbelly of Louisiana politics.
Your contribution would help us immensely in meeting our growing expenses. Simply click on the “Donate” button here and contribute whatever you feel appropriate.
Thank you.
Tom Aswell, Publisher

Got a tip?

Got a news lead for LouisianaVoice to investigate? Have a suggestion for a story? Your identity will never be revealed. Just send an email to louisianavoice@cox.net